Ethiopian Business Development Services Network (EBDSN)

 Product Development

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Marketing home  I  Problems  I  Strategies  I 
Managing prices I  Tenders  I  Promotion


Product Development



Product Strategies  [top]

An existing product can be modified by improving its features, without altering the benefits to be gained, in order to attract new users or to increase its usage. If the product’s lifetime of the product is on the downturn, then MSEs can look for new target markets and introduce the product appropriately. Upgrading quality continuously is the best strategy to follow, however, only if the micro and small enterprises can afford it. Moreover, with the different constraints the companies have it may be difficult to set such strategy.


It is obvious that quality plays an important role to play
on getting repeat purchase


If upgrading quality is too expensive, then maintaining the current level is an important strategy. In the event, that the enterprise's products are for sale to customers that are quality oriented then the characteristic has to be satisfying. Some MSEs can develop a strategy of manufacturing broader product lines. This strategy allows to profit from economies of scale, which in turn will benefit customers in getting inexpensive prices due to reduced overhead costs and so forces. In addition, manufacturing a wide or full range of products in different designs allows customers to do all their shopping in one location. This could be applicable for products, such as raw food products, handicraft products, or kitchenware. When planning to develop a new product the decision of which product and design to manufacture needs to be based on research and not just on a temporary demand for a certain product by a handful of people. When the demand for existing products is on the downturn the possibility of changing the design, size, features, or colour. becomes necessary in order to maintain sales. Moreover, such strategies require expertise in idea development and technical skills.

Establishing brand names can create more acceptability and a brand name can command higher prices. This strategy may work for small enterprises, but not for micro enterprises since it requires some expense and market campaigning. Nevertheless, branding can be applied to products, such as glue, milk and so forth. A narrow product line with more depth to quality is a liable alternative. This can be more appropriate in furniture, photography, hairdressing, weaving, and garment businesses. Creating linkages between manufacturers of raw material and those who process products is a worthwhile approach. For instance weavers can be connected with spinners.

Creating linkages between manufacturers and suppliers is a good way for MSEs to attain a continuous supply. For instance, manufacturers of chairs, tables, low bed chairs (duka) etc. can be linked with plywood suppliers. This applies also to those who manufacture cooking pans and caps who can be in touch with the metal sheet suppliers etc. Cutting product lines and focusing on fast selling products by marketing them effectively can be a good approach to reduce inventory on a much more rapid basis.


Market Research  [top]

Market research as a whole is integrated with the total business planning because it deals with the identification of present and future market situation in general. Therefore, trading has the task of going into detail of research work. Nevertheless, an export enterprise has to first acquire knowledge of the respective market potential. It is very difficult to plan world market entry without conducting market research priory. Research also provides the advantage of eliminating the dangers of intuition:

  • who are the current competitors in the market?

  • what products are sold and at which prices?

  • how do their packages appeal and how are they advertised?

The following issues can be addressed by research:

  • what product is needed?

  • the needed quality and standard of the product;

  • how to penetrate markets and increase market shares;

  • demand pattern of actual and potential consumers, competition;

  • raw material supply;

  • detailed sales information;

  • price level;

  • effectiveness of promotion programs;

  • business trends;

  • attitude and behaviour of consumers;

  • existing opportunities;

  • potential risks;

  • identifying target markets;

  • economic environment factors;

  • distribution method;

  • trade policies of importing countries.

The strategy of planning to expand foreign market can be accomplished through effective market research. Before planning to expand foreign market, a study of the issues listed below will help:

  • the potential for the product in the market;

  • what share of the market does the company currently hold?

  • how many shares can be increased within a given period of time?

  • who are the buyers of the product?

  • why do they prefer the company’s product vis-à-vis other competitive products;

  • who are the company's competitors?

  • what threats lie ahead for the company?

By means of an internal survey the following issues can be investigated.

  • market share at hand;

  • if production is expected to increase or decrease;

  • advantages and disadvantages of selling one’s own products at lower prices compared to those of competitors;

  • company's strength versus competitors';

  • the cost of slow sales;

  • past export sales trend both in quantity and value;

  • in the case of high stock of products existing, would price averaging help to sell out the balance, if so at what cost?

  • impending regulations, which may affect trade.

By means of an external survey the subsequent issues can be examined:

  • how and for what purpose do consumers use the product?

  • how is their buying decision influenced?

  • would promotional activities help sell the products;

  • rough estimate of potential buyers;

  • general economic and political situation;

  • consumer’s type and attitude;

  • speculation of production capacity and emergence of giant producers:

  • world consumption situation;

  • emerging substitute products;

  • existing competitor’s prices and the reasons for price fluctuations;

  • whether movement of price increase is in favour or against the firm;

  • threats from competition and their effect on the market;

  • if the product is best sold through agents, representatives or others;

  • how plausible opening a foreign branch is and the cost.

Data Sources

The following data sources are suggested for exporters

  • foreign embassies in Ethiopia;

  • chambers of commerce;

  • trade associations;

  • government offices;

  • banks;

  • UN and other institutions;

  • local journals;

  • technical research papers;

  • international journals;

  • foreign directories;

  • Internet information sources.

Connection between Quality and Market  [top]

Marketing has to look into the strategic quality improvement because presently consumers are highly concerned and aware about their needs. An exporting firm can gain better market shares, if it follows consumer requirements and measurements. Support and dedication from the management in quality programs is critical.

  • what kind of products are already in the market of the importing country and how is their quality level?

Quality is not an isolated field. It is a recognized guiding principle related also to other marketing mixes. It encompasses different elements of theories. All depending on the product type some define quality as:

  • performance, effectiveness, elegance, fitness, reliability, durability, safety, taste, conforming to standards, uniformity.

However, according to the definition provided by the Oxford business dictionary, quality is:

  • degree of goodness or worth;

  • general excellence;

  • unbreakable;

  • high social standard.

Some Ethiopian enterprises define quality as:

  • maintaining requisite standards;

  • defect free production;

  • systematic inspection of products.

Specific Product Strategies  [top]

With an effective product strategy a firm is enabled to work fewer hours and make money much easier. Enterprises in developing countries require decisive product strategies that can lead their business to success. Classifying products in terms of different aspects of the market, such as stated below, provides a good basis for setting product strategies.

  • benefit to consumer;

  • raw material usage/requirement;

  • life span;

  • quality level;

  • brand;

  • packaging design;

  • competition.

Whatever the product strategy is that is to be formulated,
it has to be in line with the buyer’s requirements
as well as the changing needs of society.

In setting alternatives, conducting market research is a valuable tool. Research can look into major issues such as:

  • uniqueness of the product;

  • buyer types and requirements;

  • consumption patterns;

  • frequency of purchasing;

  • availability of substitutes.

Setting product strategies can help enterprises
to reduce any disappearing Birr and minimize
the time that will be lost.

Enterprises should be keen enough to keep customers satisfied through their product strategy because the most important assets for a business organization are the buyers themselves. However, the strategy should focus on keeping customers happy with the products and with the way they are sold to them.

Product strategy that can build clientele and keep loyal
customers happy can be termed the best.

If an enterprise realizes that its strategies are effective, it should reinforce them. In contrast, if it is required to change or modify the strategy to a certain extent after a given time, then adjustments in product approaches should be made without hesitating.

The pay off to revised product tactics
based on market research is tremendous.

Although there are many successful product strategies, the ones that fulfil buyers' requirements have to be taken into consideration. Some product strategies fail for various reasons. The main causes for failure are:

  • when a well formulated product program is poorly implemented;

  • when important steps are forgotten or neglected during planning; for instance if the product approach forgets to take into consideration consumers' requirement;

  • strategizing by giving more concern to the approaches of another companies compared to own intents and goals.

Product Standardization Strategy

Standardizing product has the advantage
of minimizing production and marketing costs,
which in turn provides a better price option to the buyer.

Products with the same standard can be introduced to different sectors of the domestic market. The strategy can give advantages of minimizing production and marketing costs. Despite that, the approach may not be applied to all product lines. This approach relates to products to be sold to different markets that have the same product needs. In most cases, the product is of the same design, taste, size and specifications, except in few cases where it is slightly produced to account for local differences. Standardization systems can have drawbacks in that the product's specification or design may not be compatible to all different areas. In such cases, to enhance the product’s usage in many different locations, the application of an effective promotional program becomes mandatory.  


Brand based Product Strategy

 An enterprise can develop credibility
and create confidence on customers through branding.

An appropriate brand name is decisive for consumer bondage or the identification of products. The trade name of the product can be used to create a perceptible notion of the product. In addition, it creates a visual impression of the product. Product branding facilitates one firm to be chosen over another by just creating a branding image. The name by itself can act as the firm's spokesman and can keep 'brand loyal customers' motivated. However, setting branding-tactics requires detailed study with respect to the following questions:

  • which brand name to set?

  • which brand strategy is more effective?

  • which brand type is less costly in terms of promotion, packaging and selling?

  • what are the advantages and disadvantages of one brand over the other?

This approach has the advantage of charging premium prices and helping products to sell more effectively. In addition, it helps companies segment their markets easily for further consideration.


Offering multiple Choices

This strategy provides the privilege of buying from one
enterprise, and thereby saving time and other costs.

Some companies could have lengthy ranges of products, which are grouped based on raw material type, manufacturing process or product benefit. Manufacturing a full range of products in various designs and types provides good advantages to buyers, in the sense that they can make their selection from among many product lines, and besides, they can save time in doing so.

 The approach of manufacturing a broader product line
allows benefiting of economies of scale and creating high traffic sales.

 This strategy focuses on keeping a large selection of products to facilitate a vast assortment to buyers and consequently, to sell big quantities of products and therefore bring success to the business.


New Product Development Approach

New product development strategy has to consider
the potential buyer’s needs. There could be
instances where the temporary demand of
a certain product is considered.

New product development approaches can be successful when and if based on market research. Some consumers prefer to purchase products just because they are newly developed. For instance, some young shoppers prefer to try out new product rather than sticking to existing ones. They believe that new products are more powerful compared to existing similar products. If the target market is a "yes" type to newly developed products, then the strategy of producing new products will work. These propose can also be applied in the event that the lifetime of the products decline. The product to be developed may not be the best and most sophisticated, but has to be one that appears on the market freshly. New product development has to refer to the original marketing plan and also it needs to examine the following issues:

  • size of demand;

  • continuity of demand;

  • price issues;

  • implication of future competition;

  • availability of resources;

  • skills required;

  • investment rates of return.

Customized Product Strategy

This strategy provides an enhanced and more personalized buying option to customers whose product preferences are different to standard products. This approach has to look into aspects to which the buyer attaches more importance.

Producing customized products can provide the benefit of offering personalized products, which may not be available in other competing companies. This system provides the option of producing goods that fit a particular buyer. Certain segments of market that do not appreciate buying standard products have the alternative of going to such companies to buy according to their requirements.

The promotional program for selling customized products can emphasize the advantages and benefits the buyer can receive from the system. The selling assertion should focus on things, such as ‘made to fit you', 'fits your purpose', 'exact fit’.


High Quality Products

Buyers who are quality-oriented prefer to buy
from companies who are known in the market
as quality leaders or who have 'quality' as their motto.

A quality specialization approach provides the benefit of being known in market as a special enterprise, which consequently enables the firm to charge higher prices. Quality-oriented enterprises need to refine and add continuous value to their products, in order to keep buyers at bay. Quality upgrading is the best approach and it distinguishes a company apart from competitors. The tactic has to create a good fit between the product and buyers needs.


Modifying existing Products

When the demand for an existing product declines,
the possibility of changing the design, the size,
the features or its colour is necessary.
Moreover, the modification of tactics requires
expertise in idea development and technical skills.

To attract new buyers and to increase product usage an existing product can be modified. This system needs to be considered in conjunction with both the features and benefits of the respective product. Another alternative is to modify the benefits only. However, modifying only the features may not be in the interest of the buyer because in most cases buyer's interests are the benefits he gets from the product itself. The buyer may be ready to pay for an increased price, provided the modification is in line with his needs. Modification assumes prior market survey and it should answer inquiries such into:

  • could the product be modified technically?

  • how will the product be valued by buyers?

  • what will be the costs of modification be?

  • will the product have a competitive edge?

  • would prices increase or decrease after modification?

  • will new increased prices be accepted by existing and new buyers?


Checklist for Product Development



  • Plan some field research aspects for markets.

  • What are the main sources for research?

  • Who are the competitors?

  • What products are sold and at which prices?

  • Are there similar products?

  Quality and Training

  • Ensure the setting of quality programs.

  • Is your product’s quality based on customer requirements?

  • Consider ongoing quality improvements.

  • Has staff been trained for quality awareness?

  • How is the quality of the competitor’s products?


  • Understand competition before setting product strategies.

  • Analyse product planning from different market aspects.

  • Why do you plan to set different product approaches?

  • Does your production program consider cost minimization?


  • Check your competitor’s prices.

  • Price level: Did you consider the issues that can affect prices?

  • Take various pricing approaches into consideration.



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